The Impact of Integrated TQM and Interactivity on Customer Retention Process

Transcription

1 The Impact of Integrated TQM and Interactivity on Customer Retention Process Digital Ecosystem and Business Intelligence Institute CBS, Curtin University of Technology Perth, Australia doi: /ijipm.vol2. issue2.14 Abstract Customer relationship management [1] and total quality management (TQM) are two significant tools that have emerged to enhance effectiveness and profitability of business entities. They are concentrated on customer satisfaction. Although TQM is compatible with the customer relationship environment, constructive interactivity also adds harmonious value. Today, companies are challenging each other, not only to win customers but also to gain customers from competitors from a variety of business channels. Companies encountering complaints are exposed to loss of customers and revenue. In response a system to handle the complaints in an effective way is more than desirable. Too commonly, due to the complexity of business processes, companies suffer from lack of interactivity and weak customer loyalty. In this paper, using TQM and interactivity within the CRM environment, we attempt to increase the level of customer retention. We then provide a secure environment for a myriad of transactions comprising virtual or physical exchanges. This is intended to diminish the level of customer complaints and mitigate threats to the business from complaints received. We benefit from a conceptual framework to identify the problematic areas. We conclude this study with enhancement of customer satisfaction, profitability of the company as well as proper control over customers using a conceptual framework. 1. Introduction Keywords: TQM, Customer Relationship Management, Retention, Complaint Management, Interactivity To achieve competitive advantage companies employed total quality management and some interactivity methods in customer relationship environment. Using these technologies, companies will have better commitments to the customers; more efficiently will solve customers complaints and will satisfy their customers. On the other hand, Successful, customer relationship management initiates with a customer concentrated business strategy which is designed to retain clients and offer good products and services at such an efficient form. Moreover, it helps the company to be ahead of the competition [2]. Ultimately, interactivity may have a positive impact on the retention process. It also exerts its influence to improve customer satisfaction. In the next sections, we will define total quality management and its various facets. We also will describe customer relationship management, complaint management and retention process. In the next phase, we will raise our conceptual framework in order to show the relationship between variables and define them. In the final section, we will conclude the paper with analysis and results Total quality management definition Total quality management (TQM) is a broad topic in management to satisfy clients and employees [3]. TQM focus is on improving the quality of products and services [3]. Moreover, it has succeeded vast consideration from both industry and academia. TQM can be deemed as an outstanding and long lasting state of the art managerial tools and concepts enhanced in previous decade. It has had a prominent impact on organizations and SME s. TQM can be delineated as a managerial approach to

2 intensify a company s capacity and capability to achieve the optimum target market share. Furthermore, TQM has an ability of building up the quality of products and services [4]. From empirical researches, we can simply find out that, most of the companies that implemented TQM have been considered the advantages of TQM in varieties of departments to solve the problems and develop the effectiveness of systems [5]. What is more, it concentrates on incessant and continual enhancement of the products and services quality[3]. 2. Critical aspects of TQM 2.1. Overall Commitment It is vital that managers and employees are 100% loyal and committed to the TQM techniques and approaches. Top management should recognize and curb the rules of TQM [6] Customer-centric The company needs to prominently give service to the customer by preparing necessary information as required, promptly responding to customer inquiry forecast and analyse all information on the website of the company [6] Elaborative Procedure The Company must prepare and categorize all sorts of information to the customers and arrange all kinds of information to various clusters [6] Enhancement of the groups It is comprised of manages and employees who are knowledgeable and experts in their field with highest amount of interactivity standards [6] Long-term thinking It is one of the outstanding requirements in TQM while it is going to merge with interactivity [6] Management and Monitoring All kinds of procedures in CRM and TQM must be controlled and analysed from the initiating moment of the process Constant Advancement To satisfy clients, managers should be ascertained about the quality of services and products and the procedure of CRM Continuous Auditing Auditing guarantees that employees are pursuing evident procedures. It is utilized to maximise the processes and it is not for attacking to the employees and customers [6]. Moreover, it takes away time delays, give assistance and progress to the work. What is more, using auditing, companies would be able to review all sort of procedures ad simply find errors [7]

3 2.9. Staff authorization It is recognized among hardest barriers. The hardship arises from lack of training. To do so, companies must provide good scope of training for employees and for customers as well [6] Measuring Since, we want to introduce proper sources of interactivity methods for the customers; we also need to measure their quality and their usefulness. On the other hand, we must clearly control all aspects of our measurement to ensure the reliability of services [6]. 3. Customer relationship management Customer relationship management [1] is a consolidated method to administer and control relationships by concentrating on customer retention and relationship enhancement using people, procedures and technology [8]. CRM is described as a set of tools and strategies targeted at producing the ultimate advantage gaining an eminent balance between customers requirements and company s investments on any aspect of the business [3]. In CRM, the main concentration is on customers and fulfils their requirements. Most of the companies today are benefiting from customer relationship management [1] to increase the level of business intelligence, proper decision making process, amplified customer relations, and best quality of services and product proposing. The central definition of CRM is recognition and gratification of customer requirements conveys to increased and improved customer retention, which is in accordance with fame and profitability. It is understood that the CRM system will be capable to predict competitions in future of the Market places [9]. Above all CRM is a strategy to intensify the profit and to retain customers into various clusters based on their specific requirement [10] Customer relationship management components People management The efficient utilization of various people in the correct and precise location at the proper time is defined as people management. It is compulsory to take in the credible measures to guarantee that the people qualifications are in accordance with their job descriptions. This criterion has always been as an important need of people in different industries. Based on people management an impressive people strategy must be chosen first. In the next stage, the workforce should be investigated, skills and enhancement analysed. In the final stage, the desired strategy required for enhancement and adjustment is written down and implemented [11] Lead Management According to [11], the tracking and dissemination of sales leads are called lead management. This brings about benefits to call centre, the sales and marketing industries. This is obtained throughout inclusive study of customer buying models and the recognition of potential sales leads. In addition, lead management has some stages such as lead capturing, promotion, lead integration, lead distribution and lead tracking Sales Force Automation Sales Force Automation (SFA) alone is one of the major elements of operational customer relationship management [12]. The operational CRM is dealing with enquiries from customers and may conclude in enhanced customer satisfaction loyalty [13].Also, it is one of the critical and central components of customer relationship management. It has some critical functions like lead/account management, contact management and forecasting. Due to the requirement to identify and clarify

4 revenue probabilities, this system should be employed as a part of CRM [11]. Furthermore, SFA tools are planned and created to enhance field service efficiency [12] Customer Service Another vital aspect of a CRM system is customer service. Customer service is required because CRM is customer oriented and it concentrates on comparing customer data, gathering information about their purchase patterns and prepares this information to every department that requires it. As a result significant departments like sales, marketing and services position themselves to obtain their knowledge of the customer. This enables the organization to create accurate solutions to every customer and thus intensifies customer retention and loyalty [11]. Customer relationship management assists companies to assimilate an exclusive customer service [14] Marketing Marketing is a significant activities to publicize a product or a service to a market place [11]. Accurate and scientific marketing can bring about create an image for the company and in specific generates customer loyalty. As, cutting edge marketing is becoming very competitive and sensitive, good marketing may amplify the market anticipation and strengthen the sense of the employees and managers to achieve ultimate goals for the company followed by customer satisfaction [15]. Marketing is dissimilar to sales and promotion in a sense that the first one implies the act of selling and another one implies promotional, advertising and strategies. Customer Relationship Management makes the marketing roles easier and more possible. It enhances the performance and productivity of marketing through scrutinizing the potential and current customers [11]. If we take a look at marketing subject carefully we can draw 4P s of marketing out, namely: price, place, product and promotion. Using them, we would be able to assist company create more effective relationship with its own clients and handle the customer requirements [16] Marketing automation Marketing automation is the utilization of software to automate marketing procedures like customer segmentation, customer consolidation. CRM prepares critical information for customer behavior and their purchasing tendency in an effective way. Moreover, using CRM, company would be able to strengthen its cross- selling, up-selling and value-added selling techniques. Marketing automation is a significant component of customer relationship management. Should the company better address the requirements of customer, it needs to employ CRM to consolidate business intelligence, database of the clients and communication [14] Work Flow Automation Work flow procedure involves decreasing costs and controlling procedures. It is cost-effective and prevents re-works by employees. It lessening works and alleviates work force of not required functions. It involves cleansing and getting rid of paperwork and filling out of forms that are required. Moreover, It contains the consolidation of people and procedures so that they practice together in harmonious way along with the same objective [11] Business Reporting According to [17], The capabilities to identify the precise status of the company at any specific point of time are called business reporting. CRM plays a significant role in that it prepares reports on the business. The benefits of this element contain the capability to have latest information accessible 7/24 a day. Precise reports must be guaranteed by the companies. Using business reports experts can

5 forecast further trends and strategies. On the other hand, business report comprises web based reporting, financial reporting Analytics According to [11] analytics is the study of data. This data will then turn into valid and precise information to be used by market trends and tendencies. A comprehensive study of trend is created due to the ability to create charts, figures and diagrams using both historical and current data. This is a crucial and required segment of CRM. 4. Customer relationship management life cycle 4.1. Planning There should be someone in charge of CRM activities in an organization. In this stage all the products propose to the customers should be uniform and the value of the customized products must be clarified to the customers. In planning stage two sub components must be regarded as central to all factors. The first one is clients interaction points and the second one would be interaction points for decision making process [18] Research Managers must provide provident approaches to address the issues according to the requirements of the company under the context of CRM. It is best to deem company s framework, software and hardware which are essential while initiating the research [18] System analysis Authentic and concrete planning is an essential factor while planning and analysis. System analysis is a prominent stage among all components of CRM. To this aim, company needs to have a concrete and valid analysis system for decision making, scalability, budgeting, scheduling and financial planning [18] Design After planning, analysing and finding out the credibility of the project, the company should prepare comprehensive attributions and requirements. Thereafter, accurate software must be chosen for the precise design [18] Construction This stage is deemed as one of the final stages of CRM administration. In this part, the design will be performed and administered [18] Implementation For the sake of having vigorous implementation, company must have strong adaptability and planning [18]. Managers should be noted that CRM must be placed in all business strategies. Throughout the whole procedure, the evaluation must be accomplished to validate CRM applicability [19]

6 4.7. Maintenance and documentation It is another vital component which must be available in all sorts of CRM systems. To this aim, the company must train some of the managers and employees periodically. As the market is always changing, CRM systems and strategies must assess the quality of the information and system execution [18] Adaptation Adaptation is one of the major elements of CRM which is in its early stages. It will be varied while the company grasp new information about customers. IT managers have the main influence on improving that, otherwise company will lose its reputation [18]. 5. Complaint management Complaint management is the transition of customer contacts into information for individual customers and the management of the company. Complaint management duties pertained to this are: data collection, data analysis and mutual communication of information [20]. The final aim of complaint management and complaint management systems are to recover and build up satisfaction of the individual complainant. Also, it provides managerial information on the basis of anticipating and avoiding dissatisfaction in the future [20]. Complaint management system creates an environment for clients to openly hand their comments in directly to the company without fear of being known and the company alone will simply deal with complaints. Below, we will talk about one of the significant characteristics of CM which is the velocity of response to the clients Velocity of response Prior to this paper, some experimental projects and researches on electronic communication clarified that customers strongly believe that quick responses must be given to their enquiries. For instance, large companies must have a complaint system to respond to the customers complaints within 48h following the client s complaint at the call centres. Nearly, 90% of companies are unprepared and impromptu to sort out online customer complaints or even they are ill considered to deal with person to person complaints [21]. 6. Interactivity It is defined as a role of inter-connectedness between messages transferred by two or more people in a communication channel. Interconnectedness implies to the reciprocal responsiveness of message to different comments [22]. Furthermore, interactivity is described as the accessibility and efficiency of customer patronage tools on a website and the degree to which the website expedites mutual communication with current and potential clients [23]. Moreover, interactivity performs as an adhesive tool to keep online communications alive. What is more, interactivity should be updated, mutually tractable, responsive, manageable and absolutely concentrated on customers. Companies delve to different channels for customers and assess various procedures utilizing interactivity. Taking benefit from disparity of interactivity method like skype, fax, , face to face, meetings companies may find ability of segmenting positive thoughts about variety of customers categorize them into different clusters and customize their future interactions and with customers. Interactivity can facilitate the procedure of price negotiation as well [22]. Besides, interactivity is described as an ability of a computer-focused communication system that lets transactions of functions between sender of the message or complaint and the receiver of the comment in real or procrastinated time. Eventually, interactivity has more control over the speed, content and structure of the reciprocal communication [24]

7 6.1. Elements of interactivity to gratify communication requirements 1- Playfulness 2- Power to select 3- Connectedness 4- Gathering information 5- Reciprocal communication [24] Major elements of interactivity from the perspective of Web site visitors have been recognized involving user control, responsiveness, real time interactions, connectedness, customization and playfulness. Also, Wu [24] offered perceived interactivity comprise of three factors: 1- Perceived user control 2- Perceived responsiveness 3- Perceived customization and personalization Different facets of interactivity User control implies the extent to which a person has the ability to choose the proper timing, content, and series of a communication. Responsiveness is the relevance of a answer to earlier messages [24]. The notion of responsiveness comprises of four elements in online environment: response possibility, velocity of response, relevance of response, and control over response. In this paper, responsiveness is the main concentrated on response probability and control over response [24]. Finally, connectedness is described as the extent to which people may share common interest and transfer beneficial information. 7. Process of customer retention Retention procedure requires companies to have a sympathy toward customers and be all heart and benevolent about customers by providing different facets of information to them, inviting them to some meetings and have proper communications with current and potential customers to understand customers issues. Only in this case, the company may get to know with its problems. This method involves effective programming for having some responses to complaints such as receiving and responding, accelerating and dynamic analysis of customer satisfaction information, and development of relationship with customers. Moreover, companies should meet the needs of the customers accurately [25]. 8. Methodology An open-ended questionnaire was created and assigned to this research. It was distributed to 30 randomly selected passengers in an airport. Prior to disseminating the questionnaires we pre-tested the questionnaires. The survey questionnaires were handed in to respondents. Mostly, all respondents answered the questions at the time questions and seven of them mailed back the questionnaire. Then, using factor analysis and forecasting analysis, we analysed the questionnaires. We used 7-point-likert scale to analyse customer feedback regarding each feedback from our conceptual framework. In the next part, we will analyse the variables that directly or indirectly influence in our process

8 9. The conceptual framework that assists companies, solve the above problem in a CRM environment TQM Commitment Customer loyalty Customer Satisfaction Customer Retention Interactivity Complaint handling Convenience and Quality Figure1. Conceptual framework for Retention process within CRM environment TQM and Interactivity They are two influential aspects of business that accomplish their functions under customer relationship management context. In our conceptual framework, TQM unveil the details of information and creates a flow of information. Moreover, it generates commitment to the process. Furthermore, it is more customer-centric and has a comprehensive monitoring. On the other hand, interactivity creates direct communication irrespective of distance [26]. Interactivity also provides choice, connectedness and mutual relationship between company and customers. Ultimately, it soothes all sorts of communication problems. Using interactivity, the model would be more personalized and responsive Customer satisfaction Customer satisfaction is regarded as a relationship-oriented pattern defining various ways of satisfying customer s needs and expectations in a particular demand [27]. In general, satisfaction is comprehensive attainment of customer consent and assessing that contentment that throughout the time [27] Convenience and quality Refer to simplicity, easy to use, user friendly with higher standard of quality[23] illustrates that 30% of customers who have tendency to leave a website and enter to other web pages are due to the incorrect navigation and guidance provided by the web-masters. Therefore, it is recommended that an acceptable website must supply ease of navigation, assist the procedure with prompt accomplishment of transactions, and minimize customer effort. What is more, quality improves significant facets of a service or product that stimulate clients to repeat their purchase [23]. It simply leverages client choice, and customer willingness to buy a certain product or services repetitively without changing behavior [23]. Using TQM and interactivity methods company will encounter with commitment from customers and customer satisfaction which is the ultimate aim of each company. However, as most of the companies may lose heaps of customers every time, the company should employ new tools and strategies in order to avoid customer churn. Furthermore, since, we utilize interactivity approaches; we can easily handle disparity of complaints and get a lesson from each complaint to increase the level of satisfaction and produce better convenience, and quality in products and services. On the top of that, while we satisfy the customers and create customer retention in the company, we will face with loyalty from our customers. Convenience and quality for consumers alone can create loyalty

9 10. Result and conclusion In this paper, we investigate new conceptual framework for customer retention process. Moreover, we draw a chart based on 7-point likert scale to get the feedback from our conceptual framework. The model was satisfactory due to the fact that it intensified the process of retention and strengthens the commitment of the company to the customers. What is more, it increases customer loyalty, since the conceptual framework creates more convenience and guaranties the quality for the customers. Moreover, customer s willingness to complain declined while using this model. Based on the model, commitment from both parties had a highest ranking of all elements and convenience and quality were the other elements that the new conceptual framework generated in a proper format. Feedback from customers Number of Respondents: High, Medium, Low Confidence 20, 5, 2 Avoid future problems 11, 4, 15 Save time 19, 1, 10 Profitability 16, 8, 6 Higher quality 24, 3, 3 Customer satisfaction 22, 2, 8 Customer benefit 20,2, 8 Managerial outcomes 9, Efficient 17,1, 12 User-friendly 24, 2, 3 Control 30 Customer complaint 25, 5, 5 Table 1. Answer of respondents to each outcome of the retention process Number of Respondent s confidence higher quality efficient Impact of customersbased on final outcomes Figure 2. Customers attitudes on each outcome As shown in above table 1 and figure 3, the new conceptual framework had a considerable impact on customer complaint which decreased that to 5 complaints in whole 30 complaints. Besides, it provides a good amount of control over employees and customers and overall process of customer retention. This conceptual framework has managerial implications for the company. Also, it makes the managers aware about business procedures along work setting. The only issue that cannot be avoided

10 by this model is maximizing the level of confidence for the customers, profitability and future problems. Since, they are not predictable customer cannot anticipate them. As shown in the figure below the model is profitable as there is an increase inclination toward the diagram. Moreover, it brings about efficiency, saves time for employee and customers and decreases rework. Besides, it is user friendly, as most of the customers got benefits and did not have that much complaint and they intend to repeat their purchase, and company could manage to complete the retention process. Figure 3. Profitability of the conceptual framework Figure 4. User friendly pie chart based on the conceptual framework Customer complaint prediction based on control, profitability and saving time Figure 5. Customer complaint prediction based on the conceptual framework

11 Based on forecasting analysis, using our conceptual framework, customers did not encounter the complaints they used to do as before, and it diminished by 30% Reliability of the model Based on reliability statistics, the model is to the benefit of the customers and user friendly with.826 Cronbach's Alpa and as 96.7 of all cases were valid. Figure 6. Confidence of the customers using the conceptual framework As shown in figure 6, the level of customers confidence using the conceptual framework has increased and this alone helped the company to retain the customers and decrease the level of complaint. As clarified by the figure, the level of confidence doubled from the intervals of 5 to 20. Though, the scores are not normally distributed. In conclusion, in this paper, we integrate total quality management, interactivity method and customer relationship management to intensify the level of confidence among respondents and increase the quality of services and products. Using this consolidation, we encountered customer satisfaction and sophisticated and mutual commitment on both parties (company and the customers). Furthermore, while we implemented this system in the company, we will face much better system analysis with improved maintenance, adaptation, velocity and reliability. Though the provision of such systems is very difficult by most of the company, it is presumed to provide such a system to increase the capability of interaction and decision making. The results also illustrate that, how we can enhance customer loyalty and change their behaviour to a positive form. The conceptual framework proposed in this paper will shed light on how this sort of system could be implemented and developed. 11. Acknowledgement The author gratefully acknowledges the support of Prof Elizabeth Chang and Dr Chen Wu, for their invaluable comments and advice in this study. 12. References [1] C. software. (2005, Primary Components of Customer Relationship Management (CRM). Available: [2] A. Curry and E. Kkolou, "Evaluating CRM to contribute to TQM improvement a cross-case comparison," The TQM Magazine, vol. 16, pp , [3] A. Daghfous and R. Barkhi, "The strategic management of information technology in UAE hotels: An exploratory study of TQM, SCM, and CRM implementations," Technovation, vol. 29, pp , [4] J.-K. Chen and I. S. Chen, "TQM measurement model for the biotechnology industry in Taiwan," Expert systems with applications, vol. 36, pp ,

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